Alteryx $AYX : Rising From The Ashes?
One of the more prominent software stocks over the last few years has been Alteryx $AYX. The company provides a platform for data analytics and automation, with a specific emphasis on ETL/ELT (Extract, Transform, Load) functionality that bridges multiple data sources into an organized format that's ready for analytics/AL/ML etc. For data analysts in the industry, ETL or ELT has typically taken ~70% of their work time. With a platform that automated many of the manual processes, Alteryx gained rapid traction and growth, and so did its stock... until mid-2020.

Somewhere along that period, it not yet cloudified business, the pandemic, and a product lineup that didn't quite work had led sales to falter on growth. As a darling among high-growth stocks, it fell hard as the story diminished and valuation multiples compressed drastically. The founder-CEO spearheading the strategy took a step back and let outside management take over in 2021.

In the last two quarters, things seemed to have fared a lot better. Alteryx sidestepped most of the mega tech crash by posting two consecutive sales beats of increasing magnitude. The last Q2, in fact, recorded 50% YoY sales growth, accelerating 14% QoQ. Not bad at all.

The once decelerating trend has more or less reversed course and is now accelerating. While one would be right to compare the strength and base it on a weak 2021 of transition, the numbers are still impressive. With $400m in liquidity and a roughly flat Free Cash Flow line, things are looking sound on the financial side.

And finally, the forward valuation of 5.8x NTM EV/S is quite reasonable for the financial mix and prospects of Alteryx. If the trend of outperformance on earnings holds, we could see multiple expansion and forecast compression. Competition, however, does appear murky with Tableau, Microsoft's Power BI, and a handful of other platforms now vying for the same space which Alteryx once led with impressive momentum pre-pandemic. FCF might again reach a 20% margin at maturity, or growth could more than make up for shortcomings on the bottom line. Net dollar retention is strengthening, and so are customer counts, and other software KPIs of the sort.

So in my opinion, $AYX is highly attractive for further investigation. When there's a wide range of outcomes at a point in time where there's a lot of change, good research and analysis might lead to a conclusion that's widely distinct from the consensus. As such, a potential opportunity for faster than usual alpha might arise.

While it may have missed my radar a month ago, it's seemingly time to get to work on this name. There are software businesses with 50%+ growth and flat FCF margins trading at 10x forward sales so there's certainly still room for big returns from here.

No position yet.
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Have a friend in consulting that could not speak more highly about it. It may just be one example, but is also the reason I’ve been watching it closely. Users who love a software so much they “could not do their job without it” are critical in my eyes when evaluating companies to invest in.
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Top Gainers Today
Top Gainers Today: $MRNA, $SHOP, $SQ, $ALNY, $NET, $COIN, $U, $DT, $PATH, $HOOD, $AFRM, $UNM, $SOFI, $IONS, $CLH, $NTLA, $RNG, $MSPR, $IS, $ASAN, $PAGS, $AYX, $FTCH, $BHC, $STNE, $MSTR, $PFSI, $KNBE, $HLF, $GSAT, $AAWW, $UPST, $CWH, $NUTX, $RKLB, $ALLO, $FORG, $OLO
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Upcoming Earnings Calendar (Feb 14th - 18th)
Hey guys! Here's the upcoming earnings calendar! Three of my holdings report next week.

  • $ABNB - The stock has held up pretty well during the market sell-off. The valuation is still high, but with re-openings the company could see a big boost this year.
  • $TTD - They've said Apple IDFA is a non-issue, so their growth should be great. A key indicator of ad spend.
  • $ROKU - The stock is down almost 64% from ATH, but the fundamentals keep improving. I expect great results from the company, with ARPU growing and margins expanding.

If you'd like an easier way to track earnings dates, you can automatically sync your portfolio's earning dates to your personal calendar with just a couple of clicks here.

MON:
  • BMO: $ALX $WEBR $THS $AGTC $KELYA $STNG $OLK $GTX $ROIV

  • AMC: $AAP $POWW $CAR $PHX $ANET $CLR $AMKR $REPX $IBIO $MEDP

TUE:
  • BMO: $MAR $QSR $PTN $HUN $KRNT $ECL $BKI $TRTN $ARCH $ESEA $ABG

  • AMC: $UPST $RBLX $ABNB $VIAC $WYNN $DVN $LZB $SEDG $ZI $TX $AYX

WED:
  • BMO: $TTD $SHOP $CROX $WIX $ADI $GOLD $GNRC $DAVA $WING $KHC $AMCX

  • AMC: $NVDA $AMAT $CSCO $FSLY $DASH $SAM $TRIP $QS $MRO $ET

THU:
  • BMO: $PLTR $WMT $FVRR $YETI $TSEM $USFD $HIMX $AN $IRDM $RS $POOL

  • AMC: $ROKU $RUN $DBX $KEYS $SAND $SHAK $GLOB $RDFN $AUY $SWAV $QDEL $BJRI

FRI:
  • BMO: $DKNG $DE $BLMN $ASIX $B $ABR $PPL $BCPC $AEE
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Thanks, @awallis! Big week for my personal portfolio. I'll be watching $ROKU, $UPST, $TTD (my second largest holding), and $SHOP (30% of my portfolio)
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Upcoming Earnings Calendar! (Nov 1-5)
Hey guys! Here's next week's earnings calendar! Several very interesting companies set to report earnings. Here's the one's I'm most excited about and why:

  • $APPS: any sign of iOS ad dollars shifting to android (Digital Turbine's revenues are mostly from android).
  • $Z: an update on the real estate market and iBuying
  • $LYFT and $UBER: is mobility in the US back to pre-pandemic levels?
  • $COIN metrics on the NFT market.
  • $PENN and $DKNG update on the mobile sports betting market.
  • $ATVI number of Call of Duty Warzone players. The last reported number was 100MM.
  • $CRSR: comments on the supply chain issues they're experiencing.
  • $MELI: update on the Brazilian e-commerce market. Relevant for $SE's expansion.
Comment below which earnings report you are looking forward to the most!
Friendly reminder: you can automatically sync your portfolio's earning dates to your personal calendar with just a couple of clicks here.

MONDAY
BMO: $ON $CRNT $CNA $ALX $PCG $JELD $TKR $TRVG $AMG $SXC $SBT $ENBL $LDI $BEN
AMC: $CHGG $NXPI $CLX $FANG $SPG $RIG $MOS $ANET $CLR $CAR $WMB $ZI $O $NTR

TUESDAY
BMO: $CRSR $RACE $UAA $CTLT $BP $EL $GPN $GNRC $LPX $RL $ARCB $EPD
AMC: $AMC $APPS $ATV $ZG $TMUS $LYFT $VRTX $AYX $PGR $SEDG $DVN $XPO

WEDNESDAY
BMO: $CVS $BCRX $WING $NCLH $MAR $DISCA $EXPI $CWH $EAT $LL $SMG $CPRI $RADA
AMC: $ROKU $ETSY $QCOM $FSLY $SKLZ $TTWO $ET $MRO $SPWR $SAND $MGNI $EA $CAKE

$TXG $ONEM $FOX $ACEL $ARAY $ADPT $ATGE $ALG $ALB $AMOT $ALL $ALTM $UHAL $AFIN

THURSDAY
BMO: $MRNA $PENN $VIAC $GOLD $NKLA $W $ERJ $CYBR $HIMX $DDOG $MBUU $VSTO $REGN
AMC: $PINS $ABNB $PTON $SQ $RKT $UBER $SWKS $BNGO $NVAX $NET $MELI $OXY $DBX

FRIDAY
BMO: $COIN $DKNG $CGC $GT $MGA $ENB $TEN $AMXC $CNK $D $ELAN $AXL $FLR
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Eric Pelnik's avatar
$286.4m follower assets
Earnings this week
📞 Which calls are you most excited about?

Monday, May 3rd
$APPF AppFolio
$CAR Avis Budget Group
$IRBT iRobot
$CHGG Chegg
$EL Estee Lauder
$ZI ZoomInfo Technologies
$MELI Mercadolibre

Tuesday, May 4th
$ATVI Activision Blizzard
$UAA Under Armour
$APO Apollo Global Management
$AKAM Akamai Technologies
$AYX Alteryx
$WMG Warner Music Group
$CVS CVS Health
$MPC Marathon Petroleum
$MCFE Mcafee Corp
$KKR KKR & Co
$TRI Thomson Reuters
$D Dominion Energy
$ESPR Esperion Therapeutics
$ZG Zillow Group
$SPCE Virgin Galactic
$MTCH Match Group
$LYFT Lyft
$PFE Pfizer
$UPWK Upwork
$SPT Sprout Social
$WYNN Wynn Resorts

Wednesday, May 5th
$TUP Tupperware Brands
$BKNG Booking Holdings
$SMG Scotts Miracle-Gro
$RDFN Redfin
$GM General Motors
$ELY Callaway Golf
$ETSY Etsy
$FSLY Fastly
$GDDY GoDaddy
$HUBS HubSpot
$PYPL PayPal
$TWLO Twilio
$ZNGA Zynga

Thursday, May 6th
$APRN Blue Apron
$TWST Twist Bioscience
$BYND Beyond Meat
$BL BlackLine
$MNST Monster Beverage
$BILL Bill.com
$CVNA Carvana
$NET Cloudflare
$DDOG Datadog
$DBX Dropbox
$EXPE Expedia
$EB Eventbrite
$FVRR Fiverr
$FNF Fidelity
$FNKO Funko
$GRPN Groupon
$GPRO GoPro
$MHK Mohawk
$W Wayfair
$SHAK Shake Shack
$PZZA Papa John's
$YELP Yelp
$MRNA Moderna
$VIAC ViacomCBS
$SQ Square
$PTON Peloton
$ROKU Roku
$FROG JFrog

Friday, May 7th
$CNK Cinemark
$DKNG Draftkings

Sources: Business Insider, Google Finance, and Yahoo Finance
Very excited for Peloton. Especially to see if they announce any new products and how their guidance over the next year looks
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Eric Pelnik's avatar
$286.4m follower assets
Earnings this week
Which calls are you most excited about?

Monday, February 8th
$SFTBY Softbank
$TTWO Take Two
$HAS Hasbro
$CHGG Chegg

Tuesday, February 9th
$CSCO Cisco
$FISV Fiserv
$TWTR Twitter
$AKAM Akamai
$LYFT Lyft
$CGC Canopy Growth Corp
$AYX Alteryx

Wednesday, February 10th
$KO Coca-Cola
$TM Toyota Motor
$UBER Uber
$GM General Motor
$EQIX Equinix
$ZG Zillow Group
$EFX Equifax
$MGM MGM Resorts
$ZYNGA Zynga
$XPO XPO Logistics
$UA Under Armour
$SONO Sonos

Thursday, February 11th
$DIS Disney
$PEP PepsiCo
$KHC Kraft Heinz
$NET Cloudflare
$TSN Tyson Foods
$VRSN VeriSign
$EXPE Expedia
$K Kellogg
$HUBS HubSpot
$GDDY GoDaddy
$TAP Coors Brewing
$MHK Mohawk Industries
$DDOG Datadog
$FROG JFrog

Friday, February 12th
$D Dominion Energy

Sources: Business Insider, Google Finance, and Yahoo finance
Alteryx ($AYX ) Investment Thesis
Summary
  • Alteryx is an attractive investment because of it's ability to democratize the ability to make data-driven decisions inside companies.
  • Recent public statements from Alteryx leadership and job postings suggest the company is looking to transition from building on-prem software to providing a cloud SaaS offering.
  • The company has started a free upskill program for customers designed to educate users how to work with data, and they acquired a startup building tools which let users create models without any code.
  • The potential shift to cloud SaaS and investments in no-code tools make the company an even more attractive investment as it could well become the defacto standard way information workers interact with corporate data.**

Background**
  • Alteryx was founded in 1997 and built the first online "data engine" which could deliver demographic based mapping. Their product was used by customers to do demographic segmentation analysis of geographies.
  • Since then, the company has built out a series of products which help customers analyze datasets and identify patterns in their company. Most of their tooling has been used by "data workers", business analysts and non-AI/ML experts.
  • The company's software runs on Windows servers with web clients, and is mostly on-prem today. Some of their products are cloud-first.

Opportunity
  • Cloud SaaS: Recent job postings and statements by the company's leadership suggest they've decided to build a cloud based product offering, or are going to attempt to pivot their existing on-prem product to a cloud offering similar to Microsoft Office 365. Like MongoDB did with Atlas, if successful, I suspect this will have a positive impact on the business.

  • Democratization of AI/ML:
The company's recent acquisition of Feature Labs signals they're interested in helping their customers build more advanced models without them becoming data science experts. Feature Labs was a MIT spawned startup which built software that allowed AI to create models for algorithms with little to no code required.
Secondly, the company also recently announced a free upskill training program for their customers. Their goal is to up-skill all workers into "data workers", train existing "data workers" to become data analysts, and turn data analysts into full blown data scientists.
  • No-Code: By evolving it's current products which require little coding knowledge to use, Alteryx is positioned to create a no-code data analytics platform anyone inside a company can use to generate insights. Instead of waiting for an analyst to build you a Tableau report, newly trained "data workers" can build one themselves.
Risks
  • CSPs might offer their own native solutions to Alteryx's Analytic Process Automation platform. Much of the data companies generate already lands there, and they already have the advanced tooling (things like SageMaker and Big Query) to build upon. Additionally, key influencers like Data Scientists already work in the CSPs consoles day in and day out, so adopting Alteryx might be perceived to come with switching costs.
  • Time to market is another concern I have. Pivoting from an on-prem deployment and sales model to a cloud SaaS model will be a difficult task, and two problems in one. If they're able to get a cloud offering running in short order, upgrading customers to it and training a field on how to sell it will be critical to the company's long term success.
  • Competition from younger companies who already have cloud SaaS offerings is another concern. If Tableau were to invest in building easy to use ETL and model creation tools, they'd be well positioned to compete.
Sold $AYX. Bought $WORK.
Sold $AYX.

Doubled my position in $WORK.

4% allocation in $WORK now.

It is my 7th largest holding out of 18 total positions.

Why sell $AYX?

There's more risk & uncertainty now than when I bought it.

$AYX write-ups:



Why buy $WORK?

I use Slack every day for hours at a time and in many different contexts.

I have not used Alteryx even though I'm a Data Analyst.

$WORK Bull Thesis:


Note:

This is one of the riskier positions that I've taken.

I like the financials, the story and the positioning for $WORK from where we are today.

But the future is unknowable.

$MSFT is a force to reckoned with and there are other competitors in the space like Discord that can disrupt from the low end.
I made a big bet on WORK while it was down at $16 in March and love the product, but I worry it's got a trajectory and business model like DropBox. Charts post IPO feel eerily similar. I hope you're right as I still hold Slack, but mostly because I like the product if they weren't able to pop with the shift to virtual, I don't know what else they need to accelerate.
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Sell Watchlist
I'm likely to exit my position in $BYND in the near term. I'm also considering exiting my position in $AYX, eventually. In general, when I decide that I will sell I'm usually not in a rush to do so.

Here are my reasons for selling:

$BYND:

I buy into the benefits of Plant Based Meats and the long term tailwind at its back. I believe that it's possible for PBM products to taste as good or better than real meat, have a lower carbon footprint and be healthier for you at a fraction of the cost of real meat. I think the quality is already a step-change higher than previous veggie burgers (ie Boca Burgers etc) and will only get better from here. I believe that over time, economies of scale will drive down the cost of PBM too. We are a long way from getting there but I believe that is possible.

What I don't know is if $BYND will be one of the primary beneficiaries of this long term trend. Based on what we know today, this seems like a very real possibility but the future is unknowable and I'm skeptical of $BYND 's long term durability as a leader in the space. Anecdotally, I much prefer Impossible's product than the $BYND burger. To me, it's not even close.

I was underwhelmed by this last quarter's earnings call. Below are some stats:

  • YOY Net revenues increased only 2.7% to $94.4 million. They claimed that the slow sales are primarily driven by "a decline in foodservice channel sales due to the continued impact of COVID-19 on foodservice demand levels". They cited streamlined menus at restaurants for being a primary factor. My problem with this explanation is that it has been a known issue since the lockdowns. US & International Retail are up 115% and 135% YTD, which is good but this is down from 157% and 1,973% the previous year. Granted these are off of small bases but I'd assume the WFH environment would be an accelerant for Retail sales as people are cooking at home much more and presumably going to the grocery store more frequently. US & International Foodservice came in at 4% and -34% YTD. Both are very concerning in my eyes. The international markets they are in, Europe & China among others, are further along in the pandemic and handling it better than in the US.

  • Gross Margin came in at 27%, down 8.6% YOY. They said this was primarily due to "lower net price realization as result of higher trade discounts and lower absorption of fixed overhead production costs as the Company scaled back production during the quarter to draw down inventory levels."

  • Adjusted net loss was $17.5 million, down from $4.1 million profit a year ago. This was driven by "increased operating expenses as a result of increased headcount to support long-term growth, increases in marketing activities, higher share-based compensation expense, investments in international expansion initiatives, and continued investments in innovation.

So revenue growth has grinded to a hault, margins are down and they are no longer profitable. They attribute a lot of these problems to COVID-19's impact on Foodservice but reading through the tea leaves I just see a potentially poorly run business.

Also, the consumer-facing price point today is not very competitive and while I'm impressed with the quality of the product today, it still has a long way to go.

Bottom line, this might be closer to a Pets.com than a $CHWY.

I could be wrong here but my patience is wearing thin on $BYND.

$AYX:

Part of my thesis was that this was a Founder-Led company. I felt that Dean Stoecker was an exceptional communicator who understood the day-to-day frustrations of Data Analysts and Data Scientists. I found his departure to be abrupt and disappointing. This might be an overblown concern as Stoecker is the Executive Chairman of the Board and might have left on his own terms. Mark Anderson seems to have a ton of great experience coming from $PANW and $NET. I just don't like the way this transition was handled.

It's clear to me that they need to rapidly innovate to release some new cloud-based offerings to extend beyond on-prem. This will likely take some time to accomplish. There is execution risk with a new CEO at the helm.

Here are some of the financials from the last quarter:
  • $450 million of ARR, up 38% year over year.
  • Net expansion rate was 124%
  • $1 billion of cash and equivalents.
  • "$49 billion total addressable market"

Mark Anderson stated that the following three tailwinds are why $AYX is well-positioned for the future:
  • Business transformation initiatives are being accelerated due to the COVID pandemic.
  • Companies are struggling to leverage the massive influx of data, cascading in and around their businesses every day.
  • Legacy systems and manual processes are slowing down these transformations, often, separating the winners from the losers in this new age.

Mark also had the following to say about the path forward:
"Going forward, our focus will be on improving our self-service and public cloud capabilities to reduce the friction of adoption. And of course, we'll continue to work seamlessly with all types of data residing anywhere. What Dean, Libby, and Ned built here at Alteryx is incredible. Their legacy as innovators in this space is unrivaled.
I'm incredibly honored to step in as CEO to guide the company through the next few phases of our growth. Building and scaling world-class teams and evolving organizations to align with market trends and increasing customer demand is something that I'm not only passionate about, but it squarely leverages my experience. In my short time here, I've already identified a number of opportunities to simplify and streamline the current organization by building an execution framework to optimize resource allocation and expand global operations. This will allow us to deliver more innovation faster.
It's a familiar playbook for me. Near term, of course, I'm focused on leading the team to a strong Q4 and a finish for 2020. At the same time, we're working on a solid plan for FY '21 and beyond. I can assure you, the next several months will be action-packed."

Regarding Q4 guidance, he said the following:

"Q4 is traditionally our strongest quarter. But at the same time, we have to be mindful that businesses are really prioritizing their spend."

The CFO shared the following about Q4 guidance:

_"w_hen we look at Q4, there's still a bit of uncertainty in the market and that certainly is playing a factor as we establish guidance. The other thing just to keep in mind, I mean, we had a very strong Q4 last year. So as we look at the year-over-year comp, it's a little bit more challenging.
And when you put on top of that, the fact that we do think contract duration is going to be a headwind relative to what we saw last Q4, it just makes it a little bit more difficult when you look at it on a revenue basis."

RE: Competition, Mark said:

"it's a $49 billion market. And we think there's over a trillion dollars a year that's going to be spent on infrastructure applications around digital transformation. So there's a lot to go for here. But I look at the complementary players to us that are in the cloud or the big cloud players. We expect the really strong partnerships with them to drive -- not only drive demand in the marketplace but to prosecute that demand as well."

So, my take is the following:
  • The next 12 - 18 months will likely be challenging from a revenue comp perspective.
  • They have to innovate on behalf of the customer to meet them where they are and reduce friction in adopting their product.
  • The CEO seems smart, experienced and familiar with the business as he was already on the board. But there is risk here and I would have preferred if Dean Stoecker was still at the helm.

I'd like to stick around through 2021 as an $AYX shareholder but I'm likely to trim along the way, possibly before Q4 earnings.
Interesting points on $BYND - I am also a believer in the macro move to PBM but have purposefully stayed out of investing in the space as I think the product is likely to become commoditized. More traditional companies also have more established distribution channels, where once they have a product, they can push higher volumes of said product and at lower costs (a guess, I'm not all that familiar with the space/food supply chain dynamics).
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